You Are Currently Saving for Your Child's College Education

question 1

Multiple Choice

You are currently saving for your child's college education.The current cost of college is R10,000 a year.You expect that college costs will continue to increase at a rate of 5 percent a year.Your child is scheduled to begin attending a four-year college 10 years from now .You currently have R25,000 in an account which earns 6 percent after taxes.You would like to have all of the necessary savings by the time your child enters college, and you would like to contribute a constant amount at the beginning of each of the next 10 years in order to provide the necessary amount.(You want to make 10 equal contributions starting in Year 0 and ending at Year 9.) How much should you contribute to the account each year in order to fully provide for your child's education?

• A) R1,133.16
• B) R1,393.42
• C) R1,477.02
• D) R1,507.81
• E) R1,622.33

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Definitions:

Decision Errors

Mistakes made in the process of making choices, often due to incorrect information, poor analysis, or bias.

Groupthink

The capacity for group pressure to damage the mental efficiency, reality testing, and moral judgment of decision-making groups.

Dissension

Disagreement or conflict of opinion among a group of people.

Devil's Advocate

A role adopted by an individual in discussions or decision-making processes to present alternative or opposing arguments, aiming to challenge assumptions and promote critical thinking.